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The Myth of the Stupid German Investor

The country earns perfectly fine returns on overseas assets. The bigger problem is poor returns at home.

By

Michael Heise

Sept. 25, 2014 2:01 p.m. ET

Germans save a lot, produce plenty and spend little. The result is a massive external surplus. Last year, Germany's current account surplus stood at almost €200 billion ($260 billion), the world's largest. The flipside of this surplus is a an equally impressive transfer of capital abroad, as a result of which Germany is one of the rich world's biggest net creditors. Critics claim that much of this money is invested badly. The real problem is different from what those critics suggest.